The odd distribution of high rise construction
This tweet caught my eye:
The tweet included this graph (click link for closer view):
In the unlikely event that my math is accurate, I counted 624 high-rises under construction in Canada and 796 in America. But the US has more than 8 times the population of Canada. In addition, we are more densely populated, even if you throw out the vast northern parts of Canada. And the US invented the skyscraper.
I noticed this pattern way back in the 1970s, when I first drove across Canada. I was surprised to see tall residential buildings in some very modest sized Canadian cities, places that in America would be exclusively low rise. Thus Kelowna in central British Columbia has 5 high rises under construction and Halifax has 22, whereas Metro LA has only 9, despite having nearly 100 times the population of Kelowna and 25 times the population of Halifax. What explains this?
1. It’s possible that Canadians prefer living in tall buildings. But why such a large difference? In other respects Canada is quite similar to the US. Canadian areas with single family homes look a lot like the US.
2. It’s possible that Canadians build up because restrictive building regulations make it hard to build enough single family homes. But restrictions are also severe in LA, causing extremely high house prices.
3. There actually seem to be three regimes. Places with extremely high volume of high rise construction relative to population (i.e., Canada.) Places with a medium level such as New York, Atlanta, Boston and Miami. Even my home town of Madison. And places with a very low level of high rise construction relative to population—notably California, but also in less dynamic cities in the middle of the country.
4. It seems likely that the low construction rate in California is due to regulation. Even big cities like LA have far more empty lots than New York, places where it would be technically easy to erect high-rises. I suspect that it’s a mixture of zoning rules that restrict where you can build, and other regulations that make it much more costly when you do get permission to build (such as requirements to use union labor.)
If any readers are familiar with the construction industry, I’d like to hear your thoughts on why you see far more such buildings in some cities than others. I couldn’t even tell you why my hometown has as many high-rises under construction (seven) as the entire state of Michigan, with a far larger population. Or why Tampa has 23 while Jacksonville has zero.
Today, the San Jose metro area is perhaps the most economically dynamic place the world has ever seen, at least in terms of creating wealth. And yet even very depressed cities like Detroit and Cleveland are currently building more high-rises.
PS. Some people argue that single family homes are better than high-rises for solving the fertility crisis. But even if that were true, it would help to build more high rises for single people and childless couples in places like LA, in order to to free up more single family homes for families with kids.
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30. July 2024 at 19:39
I wonder about Mexico, or Chile, or other middle income Latin American countries. One thing that I noted about China is that when you have 500 dwelling units on an acre (or less) of land, it is really easy to put up a gate around your complex and pay guards to watch it 24/7. Which I always thought was odd, given that there were cameras everywhere, so that the only way someone could get into a complex unseen would be to find access through the sewer or to somehow tunnel in.
I think that Vancouver has a greenbelt, which might create a situation in which high rises make more sense. I also wonder if public transportation plays a role as well. Some people will pay a lot of money for the convenience of being close to a subway or rail stop, and Canada seems to have more of those than US metros of similar size.
30. July 2024 at 20:48
I’m not in construction, but am a Toronto YIMBY-sympathist that follows it quite a bit. Some thoughts:
1) While we have a lot under construction, we might not actually build as much as it seems. I would love to see more detailed analysis on this, but Brian Potter found that we build high-rises at ~1/3rd the speed of Chicago or LA, and even 2/3rd the speed of slowest US placing NYC. If our builds are under construction for longer, under construction isn’t a great indication of what’s getting built. https://www.construction-physics.com/p/which-city-builds-skyscrapers-the
2) I think Canada is a polite more lefty place and more susceptible to baptists and bootlegers. Ontario for instance created a vast greenbelt around Toronto in 2005 and many counties/municipalities in suburbs and even in rural areas outside of our precious farmland zones much prefer to force newcomers to buyout incumbent homeowners rather than zone new plots for single-family homes. As a city that was mostly parking lots in the 70s, Toronto still had some large industrial areas downtown that could be and are being converted wholesale to high density without as much fuss, but the greenbelt and green spaces in general are a third-rail here and now binding. Of course similar in California, but:
3) Ontario at least does set dwelling growth targets for their municipalities and they seem to have been usually nearly hit across municipal census areas, so maybe we’re better at forcing our municipalities to do something than some notorious US states. (Unfortunately our targets were calculated badly, for instance not anticipating higher immigration/temp-foreign-residents growth). With no way to build out but the requirement to build, our cities do eventually allow high-rises, after taking a large cut in dev charges and discretionary concessions to subsidize the incumbent home-owner cartel of course.
4) With horizontal sprawl constrained, buildable land limited within NIMBY urban spaces by zoning, and construction costs and home prices high due to item 1-3, when developers do get their hands on a parcel they fight like hell to get more floors out of it. Smaller ~6 floor buildings are rare in Toronto, we drop from high density to single family about 10-15 minutes walk from the financial district and have weird outcrops of huge-density strips bordering seas of old small houses in a few different places.
5) We didn’t have such a hard time during the GFC, so there’s been three decades of rising prices in Canadian real estate, and high rise condos are a nice low-maintenance package for investors and flight-capital, the latter being maybe more of an issue here than in the US due to our lower population and our wealthy-immigrant-friendly policies.
6) Maybe our major cities have better/safer transit systems than in the US (excepting NYC), so the sprawl and drive vs high-rise and transit leans more urbanism here. If the white-flight pattern has become engrained in Americans, the value of suburban land they move to anyways doesn’t require high densities.
7) Our relief cities with good jobs like Calgary that have ample land and construction capacity for ground-level homes are quite a bit further away from Toronto/Vancouver and have strikingly different climates. Montreal is good with building at moderate height, limiting needs for towers, but they speak french. There has been outmigration from Toronto/Vancouver, but it took seriously high prices to make people leave. We might not like high-rises as much as dislike going to where we can build anything else.
For a couple more points from the BC perspective, there’s a post here: https://morehousing.substack.com/p/high-rises
30. July 2024 at 20:52
The last thing the Canadian people need is for Scott Sumner to be “concerned” about how they choose to construct their homes.
Leave them alone please, you nutty man. Nobody needs a busybody and apparatchik in their life. Stop imposing yourself.
They don’t need you.
And one family homes and high rise buildings have nothing to do with fucking.
People fuck when they’re horny, and they’re doing it more now than ever before. Fertility rates are low for a number of reasons, but predominately because you’re ilk have killed 50M Fetuses under planned parenthood, and because real wages are lower than they were 50 years ago: that is, it’s impossible to own a house, and take care of a wife and kid working a blue collar job. But it’s also low because of immaturity (you’re a good example). The babyboomers, along with generation x, are a very obese, infertile lot, and chose not to have as many kids because they were afraid to grow up. Having a child means you have to worry about more than just yourself. Try it sometime.
30. July 2024 at 21:13
Do colder winters make climate control of single-family homes relatively more expensive, even accounting for cooler summers? I don’t know that this would be enough to drive the difference you’re describing here, though.
30. July 2024 at 21:46
I think those folks have the causality wrong there. Fertility is higher in the lower density areas adjacent to cities because space is cheaper – cheaper on per square foot of floor and ground space metric. The folks arguing the quoted try to point to Tokyo, but Tokyo actually does have very high costs per square foot of residential space – the rents are just cheaper on average because they allow folks to build much smaller apartments. $550/month for a 175 square foot apartment (available in Tokyo) for example, is about $3.14/square foot, or over $2500/month for an 800 square foot, 1 bedroom apartment.
So when people need more space, they move out to places where it is cheaper to get more. It’s hard for developed cities to compete on cost per square foot of residential area, because building up high rises and apartment condo buildings is more expensive than throwing up single family homes and duplexes.
30. July 2024 at 21:59
Ben, Thanks for that info. Lots of good points. Having traveled to Canada, it’s clear to me that it’s not just a question of slow pace of construction—Canada really does have more high rise apartments for a city of a given size.
Brandon, Canada’a climate isn’t much different from the northern US.
Brett, Good points.
31. July 2024 at 04:34
According to this 8-year old article (https://www.abc.net.au/news/2016-10-21/real-estate-warning-more-cranes-in-australia-than-us/7954108), Australia was building more apartment towers in 2016 than the North American cities of NY, Boston, Chicago, San Francisco, LA, Toronto and Calgary combined. The number of Australian residential towers going up has fallen a lot since then, but even half those levels would be astonishing given the relative populations of our cities.
I was going to say this in response to your ‘Go Midwest’ post at EconLog, but I think in addition to the points you raised there and here, there is something about the metropolitan nature of a country. Australia is highly metropolitan, with 70% of the population living in the greater areas of the 8 largest cities, with 65% in the 5 state capital cities with >1 million populations. I’d assume Canada would be similar, whereas the US, with its legacy of older industrial towns in the midwest would be much less metropolitan. Australia and Canada have NIMBY cultures as well, but people are just keener to live in one of the few large centres. Former (Sydney-based) Prime Minister Paul Keating reputedly once said that, “If you’re not living in Sydney, you’re camping”. I think most Australians would believe that if you’re not living in Sydney, Melbourne, Brisbane or Perth (all with populations of 2 million-plus), you would struggle to have a serious corporate, policy or academic career, of the type that people living in middling US cities like Seattle, Denver, Jacksonville or Minneapolis could easily have.
31. July 2024 at 04:42
Sara, as usual, hits the nail on the head.
31. July 2024 at 05:49
Maybe this has something to do with it:
https://fred.stlouisfed.org/graph/?g=1r2DL
Granted, you would need to assume that the Canadian projects got going before the 2022 housing price drop in Canada.
31. July 2024 at 05:51
Ben gets it right. A few more points:
Canada has way more immigration and population growth than the US. Metro Toronto grows by 60k per year, metro Montréal by 35k per year. The LA metro area grows by about 30k per year.
Also, Toronto doesn’t invest much in road infrastructure; especially from the suburbs to downtown. It has the third worse car traffic in the world, behind London and Dublin (https://www.tomtom.com/traffic-index/ranking/). Vancouver sits between New York City and Washington DC, while Montréal sits between Boston and Chicago. This favors high-rise construction near downtown and near transit stations.
One might wonder why Montréal builds way fewer high rises than Toronto. Essentially the Montréal greenbelt is much less strict than Toronto’s. Similarly, R1-type zoning is less strict in Montréal than in Toronto, more readily allowing for low-rise plexes and low-rise apartment/condo buildings in new subdivision and infill. As mentioned above, traffic is less bad than Toronto’s. This reduces pressure to build high-rises. The Canadian Federal government recently forced all Canadian cities to allow for quad-plexes to be built on all residential lots in order to be eligible for social housing subsidies, in addition to ambitious new units targets. This could mean that Toronto will start looking a bit more like Montréal.
Another factor: the industry exists. Canadian cities have the equipment and specialized knowhow–both regulatory and technical–to build high-rises at a fast clip.
31. July 2024 at 05:58
My link to Fred data might not give an accurate comparison of US vs Canada house prices. Here’s additional data:
https://awealthofcommonsense.com/2023/09/the-u-s-housing-market-vs-the-canadian-housing-market/
31. July 2024 at 08:18
IMO, the core difference is a decades old embrace of Transit Oriented Development (TOD) which, of course, depends on decent public transit. If you look at any of any of the smallest Canadian municipalities on the list, they tend to have decent bus networks and upgrade busy routes to BRT, LRT, and eventually mass transit (subway/skyway). All of these public transit systems tend to punch way above their weight in ridership compared to their American peers. In Toronto, Montreal, and Calgary, their mass transit systems are complemented by vast underground walking networks in their downtown core.
You can start with the provincial TOD pages for Ontario and British Columbia as a starting point. Wikipedia is a good source of data for each regional public transit system.
In terms of Ben’s comment about Ontario’s Green Belt, for me, the core purpose is sustaining the fresh water supply from the Oak Ridges Moraine. It’s more about hydrology than environmentalism, though the rhetoric can conflate the two. There is an immense amount of undeveloped land along the VIA Corridor, Ontario’s growth is not hemmed in unless you subscribe to Steve Sailer’s motivated reasoning. YMMV.
31. July 2024 at 09:11
As a follow-up to my TOD comment, part of story in the GTHA (Greater Toronto and Hamilton Area a.k.a. The Golden Horseshoe) is one of post WWII shopping malls being redeveloped as tall multi-use projects. Do a Google Search on:
site:urbantoronto.ca mall redevelopment
for some examples. This type of brownfield urban development is interesting to compare to greenfield projects like California Forever. Tyler Cowen’s post on Rinkeby reminded me of the ongoing redevelopment of (Ungated Archive) Toronto’s Downsview Airport with 115k new residents, in terms of its subway stations and major highways on the periphery. Maybe it’s just the renderings that are deceiving but it seems that the mixed-use TOD redesign of Downsview is more “neighborhood-ish” than the Tower-in-the-Park look of Rinkeby. Regardless, there is a natural pace to redeveloping 50 year old shopping malls and 100 year old heavy industry sites that is the result of path dependencies more than anything strategic. Again, YMMV.
31. July 2024 at 10:29
Personally, I don’t think you should be allowed to shift the conversation away from your past statements.
You called Donald Trump, Adolf Hitler. Instead of changing the subject to avoid discussing your reckless statements, why don’t you explain these very strange emotional outbursts, and why you are so upset with Trump for his policy on migrants, but not equally upset with the hard-line immigration policies of the prime minister in Japan, or with King Salman bin Abdulaziz al Saud.
Interestingly, you never call China, Japan, Saudi Arabia or India hard-right, but you’ll call the investigative journalist Tommy Robinson and Trump/Vance hard-right because they advocate for similar policies. In the U.K., you’ll even arrest them for publishing the truth.
https://x.com/TRobinsonNewEra/status/1817184820151070917
Why did you not condemn the shooter in Butler. Does that not interest you? Do you secretly want Trump killed, like so many other academics who took to twitter on the evening of the shooting, to express their dismay that the shooter missed?
You certainly appear to have an agenda.
31. July 2024 at 13:26
Everyone, Lots of you are missing the point. You are looking for reasons why the demand for high rises might be higher in Canada. But it’s not! It’s far higher in the US. The problem in places like California is that the supply is far lower than in Canada—perhaps due to regulation. When they are actually built, the demand is enormous.
Rajat, Good points. But given that “middling” US cities are often as large as major Australian cities, it’s still not clear why we don’t build more towers.
LK, You said:
Canada has way more immigration and population growth than the US.”
No, it has more as a percentage of population, but the US has far more in absolute terms.
Edward, You said:
“Personally, I don’t think you should be allowed to shift the conversation away from your past statements.
You called Donald Trump, Adolf Hitler.”
Of course I did not. But you make a good point—we should not let Vance “shift the conversation away from his past statements.”
31. July 2024 at 13:43
What the heck is wrong with you Sara?
31. July 2024 at 16:29
Scott:
I lived in Ottawa for a few years and used to have close friends there so I have visited many times since. There is a huge green belt around the city and extensive zoning regulation. I concur with Ben: there is extensive land use regulation in Ontario. I also lived in Winnipeg, which is just the opposite. There are almost no residential high rises there and the rental housing stock is very old. OT but interesting: my appartment complex in Winnipeg shared a property line with the Canadian Mint.
I have friends in Vancouver and have visited many times. Recently I looked up some information on housing there. Vancouver is also surrounded by a restrictive green belt.
You say the demand for high rises is higher in the US. Where do you get that idea? The demand for *residential housing* might be higher in the US but how can you distinguish between “high rise” demand and general housing demand? Maybe people in the US don’t want to live in high rises.
Also: southern California is cut by one of hte world’s most active and dangerous geological structures, the San Andreas fault. It would make sense that high-rise construction there would be much higher cost per sq ft than in Dallas, Minneapolis, NYC or all of the NE. Portland / Seattle / Vancouver have some seismic risk but it’s not nearly has high as LA / SF, both of which are nearly certain to experience a major EQ about every 50 years.
My guess is that the seismic risk explains the difference between SoCal and the rest of US and the general lack of zoning restrictions – due to Americans’ strong preference for SFH – explains the rest.
I lived in Canada for quite a while on different occasions. Canadians are generally inclined to suck it up and take whatever the government dishes out. Americans aren’t. That’s why Americans fought for their independence from the Brits and the Canadians just paid the taxes. In Canada, the government just imposes things on Canadians and they just accept it. Apparently their only protest is to stop having children.
31. July 2024 at 16:47
BTW, LA also has several other major faults besides the San Andreas. The SAF originates as an oceanic tranform in the Sea of Cortez. In SE CA, it makes several major bends, which generates dozens of other substantial faults. Curvature on faults plays a major roll in the magnitude style of deformation during an EQ. Obviously translating a solid block of rock around a corner on a fault without opening any space necessarily leads to extensive additional deformation within the block that would not occur if the block were being translated along a planar structure.
This map:
https://www.researchgate.net/figure/Tectonic-subdivisions-and-geomorphic-provinces-of-southern-California-Red-box-is-3_fig2_367520027
is pretty simple and shows only the major structures, but you can se the complexity of the structure of the region. The Garlock fault to the north is a major intraplate structure which truncates the southern end of the Sierras which accomodates the E-W extention of the Great Basin. The SAF makes a major westward then northward bend. The sense of movement on the SAF means the bend is a “restraining bend” and so shortening occurs across the bend, creating small mountain ranges like the Transverse Ranges.
All of this leads to frequent 7-8 mag EQs.
31. July 2024 at 17:17
Is the US actually more densely populated once one excludes the north of Canada?
Vancouver is more dense than all US cities besides NYC and SF; Montreal is denser than all besides those two and Boston.
Rather impressive the 3rd and 5th densest cities in US-Canada are in a country with less people than the state of California.
1. August 2024 at 08:18
Kangaroo, I addressed that in my newer post.
Tacticus, You asked:
“Is the US actually more densely populated once one excludes the north of Canada?”
Yes, it is. Some Canadian cities may be denser, but overall the inhabited part of the US is more densely populated than the inhabited part of Canada.
BTW, places like LA and Las Vegas are among America’s densest metro areas.
2. August 2024 at 14:47
Do Canada’s Asian immigrants have a preference for high rises?
2. August 2024 at 17:10
“Some people argue that single family homes are better than high-rises for solving the fertility crisis. But even if that were true, it would help to build more high rises for single people and childless couples in places like LA, in order to to free up more single family homes for families with kids.”
This is nonsense logic. Highrises are an insanely antifamily housing structure. Everywhere highrises are built, fertility rates plummet. Places full of high rises have insanely low fertility – almost always below 1 birth per woman. Worse still, these highrises and urban places will lure young people for generations to come, holding fertility low long after depopulation alleviates the housing shortage.
2. August 2024 at 17:15
Dave, Maybe, but this trend precedes the big wave of Asian immigration.
Daniel, I see you are new here. You might consider a course in basic logic, as you didn’t even address my point.
“Places full of high rises have insanely low fertility – almost always below 1 birth per woman.”
Yes, and hospitals have a well above average death rate. Should we stop building hospitals?
3. August 2024 at 14:18
– Canada is much more urbanized than the US.
– Canadian cities are safe and nice, and where most people want to live. Many US cities are oriented around suburbs and being away from poor people, making the urban core less desirable (where high rises would naturally be).
– The US is so densely populated and filled with medium-sized cities that one can live in many rural neighbourhoods or small towns and still be near a medium-sized city. In contrast, Canada is so empty that if you are in a small town or rural neighbourhood, you are likely very far from amenities.
– Canada has lots of greenbelt or similar restrictions.
– Since Canadian developers/financiers are already familiar with building highrise and have developed the skill/fluency for it, it makes it more likely to build them elsewhere.
3. August 2024 at 18:54
Daniel, Good points, but they don’t really bear on the question of why Canada builds 20 times as many high rises as California. There’s plenty of demand for high rise living in California. The big barrier seems to be supply restrictions—it’s really hard to get permission to build.
4. August 2024 at 05:25
Mostly zoning and building codes are to blame for fewer high rises in the USA. In Canada single family homes are very expensive. Retired people are likely to sell their expensive house and move into a 1-2 bedroom apartment that’s closer to shops and within a walking or transportation to where they need to go. The public transportation feels safer in Canada than the USA. And it’s easier to get from point A to B even for those living in the suburbs. USA towns and suburbs have lots of NIMBY rules. For example some towns near me don’t allow to build a 4-5 story buildings, even near main roads and smaller intersections. They say many excuses like people without family values will park on to their streets, there will be more parties, less safety. Again those are their words. Whereas elsewhere in the world lots of families safely love in 5 story buildings. Those are low enough to enjoy sitting on a balcony, and easy enough to run up and down the stairs for person any age, provided they have placed they can walk to locally. So yes the Original post is about high rises, but it doesn’t help anyone that 5 story buildings don’t exist either. Also building codes and setbacks cause buildings to be bigger, condos to have smaller number of separate rooms, less green area outside around the building. Yes in Canada you get the high rises, but in the US you really don’t get neither.
4. August 2024 at 07:59
Kelowna is a somewhat unique situation. Many baby boomer retirees from across Canada are attracted to Kelowna for the milder winter temperatures, abundance of outdoor activities, beautiful lake views, and wineries. UBC is constantly expanding which attracts students in need of housing as well. This hive of activity is also attracting families to a city with plenty of construction jobs, good schools, and slower lifestyle. Many people from Lower Mainland BC and Alberta have vacation homes in this beautiful area. Some are commuters who work in Northern Alberta and BC and live in the Okanagan Valley. All of this is pushing the construction of more housing units and makes Kelowna the fastest growing city in Canada.
4. August 2024 at 16:27
Lane and Carol, Thanks for that info.